Justifications for encroachment

8.110   Arguably there are a number of laws that interfere with real property rights. This section focuses on justifications which have been used with respect to environmental laws, as these laws generated the most debate among stakeholders in this Inquiry.

8.111   This Inquiry heard from two groups of stakeholders: those who emphasised an environmental perspective and those who emphasised a private property perspective. The NFF represented the views of those who emphasised a private property perspective. In the wider public debate, others have also defended private property.^[179] Lorraine Finlay has argued that ‘[t]he link between property rights and individual liberty remains relevant in the modern context’^[180] and, in her view, ‘the existing protections are insufficient and largely symbolic’.^[181]

8.112   Environmental Justice Australia and ANEDO represented the view of those who emphasise an environmental perspective. Generally, environmental defenders put forward the justifications for interferences with real property rights. Environmental Justice Australia noted ‘[t]he recognition, both internationally and domestically, of the right to property is tempered with the recognition that it will be subject to lawful limitations imposed by the state’.^[182] Laws limit land and water use to balance competing private interests, to protect the environment^[183] or for the public interest. ANEDO explained that planning and environmental laws ‘evolved in part to address land use conflict arising from incompatible uses of private property (for example, industrial and urban uses), and competing use of natural resources’.^[184]

Necessary and in the public interest

8.113   The most general justification for laws that interfere with vested property interests is that the interference is necessary and in the public interest. This is also an often used justification in respect of laws which may be seen to interfere with rights in real property.

8.114   Those who emphasise an environmental perspective argued that environmental regulation—which may interfere with real property rights—is both necessary and in the public interest. There are a range of environmental treaties which require Australia to take actions which may affect property rights.^[185] For example, a number of relevant provisions in the EPBC Act were enacted so as to comply with Australia’s international obligations.^[186]

8.115   ANEDO and Environmental Justice Australia referred to the rationale for environmental laws as being in the public interest. As ANEDO put it, ‘[e]nvironmental laws exist to protect the environment and conserve natural resources in the public interest, for the benefit of all Australians, including property owners’. ANEDO cited Dr Nicole Graham, who has argued that ‘[e]nvironmental laws indicate the government’s prerogative, indeed responsibility, to balance private rights against the public’s interest in health and environmental protection’.^[187] Environmental Justice Australia cited Professor Kevin Gray, who stated that

… privileges of ownership have always been intrinsically curtailed by community-oriented obligation. … The community is already entitled—has always been entitled—to the benefit of a public-interest forbearance on the part of the landowner.^[188]

8.116   ANEDO called for recognition that rights and freedoms operate in an ecological context, and stated that the need for ecological sustainability meant that the public interest is more prominent today than in Blackstone’s 18th century England.^[189] It referred to Preston CJ of the NSW Land and Environment Court who has argued that the increasing strain on ecological systems will mean that ‘the public benefit demands from these resources will increasingly have to be met first, before the resources are available for private benefits’.^[190] ANEDO submitted that there is ‘evidence that the wider community values the environment and feels that regulation across a wide range of sectors is “about right”’.^[191]

8.117   Another argument pertaining to the public interest is that a requirement to pay compensation to landholders would discourage regulators from implementing environmental protections.^[192] ANEDO referred to ‘takings’ legislation in the US which, it argued, has had a ‘chilling effect’ on government regulatory activity.^[193] Some consider that s 51(xxxi) of the Constitution can have a similar effect.

8.118   ANEDO also submitted that the ALRC should consider ‘the right of all Australians to a healthy environment’ which is ‘emerging’ in human rights law.^[194] However, as noted in Chapter 1, in this Inquiry the ALRC is focusing on existing common law rights rather than any parallel human right that may be understood, or developing, in international law.

Adequacy of existing protection

8.119   Both ANEDO and Environmental Justice Australia submitted that existing protections are adequate to safeguard against any encroachments.^[195] Both stakeholders referred to s 51(xxxi) of the Constitution. Environmental Justice Australia saw this protection as adequate: ‘[t]he protection against the acquisition of property by Parliament without compensation operates to protect individuals and ensure that they do not bear a disproportionate burden for the benefit of the community’.^[196]

8.120   Both also referred to other measures which they considered to be important to ensure that private and public interests are balanced fairly. Environmental Justice Australia referred to the requirement that laws not be arbitrary or without foundation but rather for a proper purpose.^[197] ANEDO referred to ‘public participation and transparency in decision-making, court review mechanisms and other procedural fairness’.^[198] 

8.121   With respect to the EPBC Act, ANEDO submitted that the embedded objective of ‘promot[ing] ecologically sustainable development’^[199] guides decision-makers to effectively balance and integrate economic, environmental and social considerations before making a decision that affects property rights.^[200]

Economic arguments

8.122   ANEDO also referred briefly to some economic arguments. It referred to a 2012 Senate Inquiry that ‘called into question’ the suggestion that environmental laws are causing private developers to shoulder an unreasonable burden.^[201] It also referred to a number of economic arguments that have been raised to criticise US-style ‘takings’ legislation.^[202]

8.123   Others have also assessed the economic arguments which have been used to justify encroachments on real property rights. For example, in 2004 the Productivity Commission considered such arguments in one of its reports.^[203] Andrew Macintosh and Richard Denniss analysed both equity and economic arguments in their paper assessing whether farmers should have ‘additional statutory rights to compensation when restrictions are placed on their ability to use or clear land and when water allocations are reduced for environmental purposes’.^[204] In part, Macintosh and Denniss’ study responded to the claim that ‘the provision of more secure property rights will stimulate greater investment and improve the allocation of scarce agricultural resources’.^[205]

8.124   With respect to the economic arguments, Macintosh and Denniss explained that, because market failure causes many environmental problems, policy makers can choose between polluter-pays policies and beneficiary-pays policies.^[206] The NFF advocated the implementation of a beneficiary-pays model. Under such a model, the person who obtains a benefit should pay the cost of undertaking it. So if a land owner is prohibited from clearing land for the benefit of the wider community, then the community should pay that land owner compensation. Under the polluter-pays model, a person taking an action should be required to pay the full costs associated with taking that action. So if a land owner does clear the land, that land owner will have to pay the community for any environmental damage caused.

8.125   Macintosh and Denniss explain that while polluter-pays policies are generally considered to be more economically efficient than beneficiary-pays policies, they typically have higher political costs.^[207] They concluded that farmers should not be provided with additional statutory rights to compensation in respect of interferences with land use, in part because such an approach would be unlikely to result in a significant increase in agricultural investment or output.^[208] While they acknowledged that there was a more convincing economic argument with respect to the claim for compensation with respect to interferences with water use, they similarly opposed the creation of additional statutory rights here, explaining that a number of studies had concluded that the economic gains could be limited.^[209]

8.126   In its report, the Productivity Commission stated that a ‘major aim’ of its recommendations was ‘to make the cost-benefit trade-offs involved in achieving various environmental objectives more transparent, so that optimal policy choices are made’.^[210] It stated that the cost-benefit is ‘obscured’ in cases concerning native vegetation and biodiversity regulation of private land ‘because the costs of regulation are largely borne by landholders’.^[211] It observed that

Regulation of native vegetation clearing on private property effectively asserts public ownership of remnant native vegetation while leaving its ongoing day-to-day management in the hands of the (uncompensated) landholder. From the landholder’s perspective, native vegetation loses much of its private value and becomes a liability. … When regulation reduces the private value to landholders of native vegetation, incentives to care for it are reduced. The prospective private loss also creates an incentive to circumvent the regulations … or to bring forward clearing as insurance against possible strengthening of regulations in future.^[212]

8.127   It continued:

Poor incentives for landholders to comply with current regulatory arrangements could be addressed to some extent by compensating landholders for their losses. Payment of compensation would also make the costs of regulation more transparent to the community, facilitating comparison with environmental benefits. However, the Commission does not recommend simply compensating landholders for the impacts of existing compulsory regulatory regimes. This is not only because of the numerous difficulties in assessing appropriate farm-level compensation … but because continued reliance on regulation to achieve a range of broadly-defined environmental goals appears unlikely to be the most effective, least-cost option from a whole-of-community perspective. In this case, compensation would merely shift an unnecessary large cost burden from landholders to taxpayers.^[213] 

8.128   Relevantly, it recommended:

Landholders individually, or as a group, should bear the cost of actions that directly contribute to sustainable resource use (including, for example, land and water quality) and, hence, the long-term viability of agriculture and other land-based operations.^[214]

8.129   Another relevant recommendation was that

Over and above landholder responsibilities, additional conservation apparently demanded by society (for example, to achieve biodiversity, threatened species and greenhouse objectives), should be purchased from landholders where intervention is deemed cost-effective.^[215]

8.130   Macintosh and Denniss explained that farm lobby groups welcomed the Productivity Commission’s report, considering it to support their claims for a statutory right to compensation.

Despite the enthusiastic response by farm lobby groups, the Commission’s position on the creation of a statutory right to compensation is unclear. The report does, however, support the notion that public good environmental benefits associated with the retention of native vegetation should be purchased from landholders. It is likely that a statutory right to compensation for the impacts of some native vegetation and biodiversity laws that are designed to achieve ‘public good environmental benefits’ could fit within the framework envisaged by the Productivity Commission.^[216]

Distinguishing between rights

8.131   Some stakeholders conceived of an individual’s rights pertaining to a particular property as being of a different order from human rights. In ANEDO’s view, ‘[t]he identification by the Inquiry terms of reference of environmental law as an area that potentially unreasonably impinges upon personal freedoms evidences a misunderstanding of human rights principles as they relate to property rights’.^[217] Environmental Justice Australia submitted that clearing land of native vegetation is not an innate human right.^[218] It submitted that

The principle of a right to own property and not to be arbitrarily deprived of that property should not be confused with the substantive rights that an individual may have to any particular property and does not and should not be seen as a limitation on the ability of governments to enact laws to protect the environment.^[219]

8.132   In its view, the rights to ownership of property and against arbitrary deprivation of that property that are protected in international law enjoy ‘a fundamental foundation in the integrity and dignity inherent in every person’ whereas ‘particular rights to certain property as they exist at a particular point in time’ do not have such a foundation.^[220]

8.133   Environmental Justice Australia also pointed to the universality of human rights. In its view it would be problematic to protect the content of a particular interest in particular property as it would ‘not be universal’, but rather would ‘be concentrated in the hands of the very few’.^[221] Both it and ANEDO were critical of any attempt to use a human rights argument to challenge environmental law and regulation. ANEDO saw it as ‘nonsensical’.^[222] Environmental Justice Australia submitted that ‘[t]he protection of the content of particular property rights is simply not suitable to a human rights style evaluation framework’, such as using a proportionality test.^[223]

8.134   It is important to note that this Inquiry is concerned with a review of Commonwealth laws for consistency with traditional rights, freedoms and privileges. That is, the Inquiry is focused on the recognition of rights, freedoms and privileges by the common law rather than the recognition of human rights in international law.^[224]

Proportionality

8.135   In the European context, a proportionality test has been used to determine whether interferences with real property rights caused by environmental laws are justified. Article 1 of Protocol 1 to the European Convention on Human Rights protects the right of Europeans to ‘the peaceful enjoyment’ of their ‘possessions’. Further, it stipulates that ‘no one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law’.

8.136   The European Court of Human Rights has heard a significant number of cases where a citizen has alleged that a State has violated—unjustifiably interfered with—their right to property by taking measures (authorised by environment-related legislation) to protect the environment.^[225] There are a number of steps in the test for determining whether environmental legislation has unjustifiably interfered with property rights. With respect to the proportionality part of the test, which asks whether there was a ‘reasonable relationship of proportionality between the means employed and the aim pursued’, the Court in Fredin v Sweden (No 1) stated that States enjoy ‘a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question’.^[226]